The Planless Plan

I try not to be political when I write, because my political leanings might not be your political leanings. And also because investing and politics really don’t mix. In the words of Warren Buffett, “if you mix your politics with your investment decisions, you’re making a big mistake.” The stock market doesn’t care whether the country is led by a Republican or a Democrat. Companies will continue to increase their profits, regardless.

It does seem though that watching this current President in action is a useful lesson in what NOT to do and how NOT to behave.

Here’s what I am thinking.

There was a well-known strategic quote from World War II, most commonly attributed to the British general, Field Marshal Bernard Law Montgomery, that went along the lines, “The Germans had to win. The Allies only had to not lose.”

It’s been wildly paraphrased and has resurfaced in the analysis of the current war.

Trump, it seems, had a catastrophic misunderstanding of Iran and the regime. Karim Sadjadpour wrote in The Atlantic that whilst Trump has vacillated between Neville Chamberlain and Attila the Hun (not a good chap for those who don’t know their history), Tehran has the benefit of clarity: “It’s ideology is resistance, its strategy is chaos, and it’s endgame is survival.”

Back to the Montgomery quote – they only had to not lose. They just have to survive.

And not lose they have.

Iran’s regime is still standing. They still have their enriched uranium stockpiles. And they have now learned they have economic leverage over the entire world.

How did they do this?

They planned.

For 47 years.

They planned for survival under sustained Western and Israeli pressure.

They built low-cost systems (drones) which have forced their adversaries to use expensive interceptors to shoot them down.

They built a decentralised “mosaic defence” system designed to function even if senior leaders, hubs and communications are struck.

They built a system of deeply buried underground facilities which are hugely complex underground cities which protect them from air strikes.

They knew this was coming, and they were ready for it. They endured.

Meanwhile Trump launched into this war, seemingly without plan.

One of my favourite commentators, Alistair Campbell, summed it up beautifully when he referenced a German headline (he speaks fluent German) “Ein planloser Plan”, which is literally translated as ‘A plan without a plan’. The planless plan.

Do they have a plan?

This idiom is used in German political journalism and is commonly used to describe strategies that pretend to be decisive while lacking structure, sequencing or end-state thinking.

The President has proved that he is completely unable to control himself and his impulses. He is emotional, impulsive and perhaps reckless.

It has also become clear, if it was not before, that there is no one in his group of advisors that are willing to say, ‘you must not do that’. He has no one to protect himself from himself.

As I said, I am trying not to be political, more fact-stating than taking a political bent (although you know which way I lean).

What do we take from all this?

Be less like Trump and more like Iran?! I am of course not saying that...Iran is a despicable, cruel and evil regime.

But I am saying, don’t be like Trump. He may have destroyed his entire political career and legacy with this disastrous, ill-planned and emotional foray.

There is a crude analogy here with financial planning and investing.

·       You really need a plan – don’t go into retirement thinking you can ‘wing it’. You can spend your entire career working hard and then blow it right at the last minute.

·       Understand that successful investing is not about winning. We don’t invest to ‘win’. We invest so that we can do what we want to do with our life.

·       We win by not losing. Survival is a really important concept in investing – we want to survive long-enough to allow compounding to work its magic. The key is to endure, never to blow yourself up – don’t put all your money into one thing, don’t use leverage – follow the time-tested principles.

·       You need someone around you to protect yourself from yourself. Benjamin Graham said, “the investor’s chief problem – and even his worst enemy – is likely to be himself.” This is most critical in the period around your retirement. You need someone who will say to you ‘you must not do that’. There is nothing more important that an advisor can do; prevent you from making the big mistake.

So that’s it. Lessons from Iran and Trump. One planned, one didn’t.

And listen, I may seem to be making light of something incredibly sad and serious. I am not. War is horrendous and has always been. I cannot imagine what it like for the millions of people in the Middle East who tuck their children into bed each night wondering if a bomb might fall on them. How lucky we are to tuck our children into a safe bed at night.

Georgie

georgie@libertywealth.ky